It seems very odd to have a discussion of arms race dynamics that is purely theoretical exploration of possible payoff matrices, and does not include a historically informed discussion of what seems like the obviously most analogous case, namely nuclear weapons research during the Second World War.
US nuclear researchers famously (IIRC, pls correct me if wrong!) thought there was a nontrivial chance their research would lead to human extinction, not just because nuclear war might do so but because e.g. a nuclear test explosion might ignite the atmosphere. They forged ahead anyway on the theory that otherwise the Nazis were going to get there first, and if they got there first they would use that advantage to lock in Nazi hegemony, and that was so bad an outcome it was worth a significant risk of human extinction to avoid.
Was that the wrong thing for them to have done under the circumstances? If so, why, and what can we say confidently in hindsight that should they have done instead? If not, why is the present situation saliently different? If China gets to AGI first that plausibly locks in CCP hegemony which is arguably similarly bad to locking in Nazi hegemony. Trying to convince the CCP that they will just kill themselves too if they do this, so they shouldn't try, seems about as tractable as persuading Werner Heisenberg and his superiors during WWII that they shouldn't try to build nukes because they might ignite the atmosphere.
I used to be a middle manager at Google, and I observed mazedom manifesting there in two main ways:
If you try to make your organization productive by focusing your time on intensively coaching the people under you to be better at their jobs, this will make your org productive but will not result in your career advancement. This is because nobody at the level above you will be able to tell that the productivity increase is due to your efforts-- your reports' testimony to this effect will not provide appropriate social proof because they are by definition less senior than you. To advance your career you must instead give priority to activities which call you to the attention of those who can provide that social proof. This is called "managing up and across."
In order to ensure that the organization works in consistent, fair, legal, ethical, and legible ways, corporate policy in a multilayer organization tends to put more guardrails around the behavior of middle managers than on those either above or below them. This strips those middle managers of the feeling of agency and autonomy which might otherwise provide a non-ladder-climbing intrinsic motivation to do the work. Thus it strengthens the selection pressure for those whose main motivation is ladder-climbing.